|Golden parachutes for the smart professional|
Wednesday, 23 May 2012 00:00Written by Marianne Rittner-Holmes
A golden parachute is a colorful term for pay-packages for high-level executives whose positions afford them the chance to negotiate a bail-out for themselves in the chance that their company is merged, sold or hostilely taken over.
The pros are that golden parachutes allow companies to lure top-notch performers by ensuring they will be taken care of financially in the event of an ownership or leadership change; the cons are that the pay-out is not usually tied to company performance. An executive can manage poorly, the company can lose money—but the executive will be paid millions of dollars anyhow.
If (or when) you reach this level of corporate power, trust that you will know how and when to negotiate it. Golden parachutes can include payouts, stocks, and/or salary and can total into the hundreds of millions of dollars. (Yes, hundreds of MILLIONS, although the federal government is looking at regulations to limit them.)
A fewhit this highest of levels among corporate performers. So, what is the message you can take away regarding golden parachutes?
Two points: Learn to negotiate on your behalf in the workplace, and learn to look and plan beyond your current position in the event your employment changes.
Negotiating: If you’re unclear about how negotiations work or how to participate in them, read, learn, ask those who do so for a living. It’s a fascinating life-long study that can be taught and used in all venues.
Start negotiating prior to accepting a position with a company. Most corporate structures have a salary grid based on the grade of your position. If you have prior experience in the field, ask that you be brought in at least at the midpoint of the range. The higher your starting salary, the higher your raises, since most are based on a percentage of your annual income. If you’re new to the workplace, market and position yourself to get an offer above the entry level number.
Plan beyond today: What would you do if you lost your job tomorrow? Economic uncertainties lately make this a more relevant question than in the past. Do you have enough money saved to cover your living costs for several months? Do you know what other opportunities are out there for you?
Prudent professionals strategize and plan. They are forward-thinking, posing “what ifs” all the time. Research your field and competitors. If your company is bought out, reducing its workforce or closing its doors, prior knowledge of other companies can transition you smoothly into another job. Your diligent research can take you to the head of the line at another business before it gets flooded with resumes from your out-of-work colleagues.
Constantly search job openings, not out of a lack of loyalty for your current employer, but for your own self-preservation. Your primary responsibility is to yourself and your family. The top execs who are fortunate enough to negotiate a golden parachute for themselves will not be thinking of you at the time of their pay-out.
It goes without saying that keeping your resume up-to-date is a wise decision. Maintain an active list of your responsibilities and successes in concrete terms of performance. Nothing speaks louder than results.
If(when)you do rise to the level of executives who will benefit from a golden parachute, congratulations! Until then, use these two tips to help you on your way up.